Big Surge Expected In Offshore Outsourcing By Banks, Study Says

Offshore tech spending by banks will increase from the present 6% of the banking industry's $44 billion total annual IT budget to 30% by 2010, according to Deloitte.

"Among larger institutions in particular, offshoring is not one available cost-cutting strategy, it's become a basic necessity," says the study, which was released Wednesday. Banks are moving well beyond outsourcing low-level application maintenance work and are increasingly relying on offshore service providers for help with more sophisticated technology projects, the study says.

Offshoring tech work offers big savings as programmers in India, for example, are paid anywhere from 40% to 80% less than their U.S. counterparts.

Deloitte says banks can save 40% on most IT projects by moving them to an offshore service provider.